NAVY CONTRACTORS GUILTY IN BRIBERY SCHEME

Pair provided gifts to workers at Navy base

A federal jury on Monday convicted two Poway defense contractors of bribing civilian employees at North Island Naval Air Station with thousands of dollars in gift cards, jewelry, fancy electronics and cash in exchange for landing contracts.

The jury also acquitted Ehnow of five specific bribery charges and Loehr of one such charge. Both now face potentially lengthy time in federal prison when they are sentenced in May.

The verdict capped a weeklong trial before U.S. District Judge Larry A. Burns. It marked the second stage of a federal investigation that began in late 2010 of a corruption ring at the Coronado Navy base where prosecutors said civilian workers received more than $1 million in bribes from 2003 to 2010.

“These defense contractors profited, not from doing business the right way, but by fraud and bribery,” U.S. Attorney Laura Duffy said in a news release. “Today’s verdicts send a clear signal that our community will not tolerate corruption.”

Federal prosecutors said that in addition to providing bribes, the contractors also charged the government for providing various items that were not covered under the contracts they were working under. To do so, they submitted false bills that made it look like they were billing for legitimate materials covered by the contract.

Ehnow, 46, and Loehr, 52, were charged with bribing civilian contractors working on an aircraft repair and maintenance program at the base. The bribes were orchestrated over a period of years by Donald Vangundy, a civilian contractor in charge of a tool program at one of the base workshops.

He pleaded guilty last year to bribery and wire fraud and is serving a 41-month prison sentence. A co-worker, Kiet Luc, received hundreds of thousands in bribes like Vangundy and is serving a 30-month sentence. Both testified at the trial that ended Monday.

The bribes were hidden in purchase orders under existing government contracts that Vangundy helped write and administered. Assistant U.S. Attorney Robert Huie said that the Poway contractors routinely included a markup of 25 percent or more on the costs of the bribes when they submitted the bogus orders.

In return, the defense contractors received government work orders under the contracts for supplying tools and other materials.

In all, prosecutors said that Ehnow’s company got more than $3 million in proceeds from the scheme, and Centerline received $1 million.

Others who previously pleaded guilty in the corruption case were John Newman, who sold L & N to Ehnow in 2007 and stayed on under contract as an employee; Paul Grubiss, a top salesman at Centerline; and Michael Graven, owner of a Carlsbad defense firm implicated in the scheme.

At the trial, lawyers for Ehnow and Loehr said their clients were unaware of the bribery scheme and that it was carried out largely by employees. Ehnow’s lawyer, Kevin McDermott, said Newman had been bribing Vangundy for years before Ehnow bought the company and continued to do so after it was sold.